Nikkei rebounds in late Asia-wide rally

ChrisOliver

HONG KONG (MarketWatch) -- Asian markets staged a dramatic reversal Tuesday, climbing out from steep loses in the morning to end the day broadly higher.

Japan's Nikkei 225 whipsawed in a 500-point trading range to end up 1.92% at 16,184.87, with some of the volatile trade owing to unusual activity in the futures markets.

Traders who had sold the market short were forced to buy back late afternoon in a classic short-covering rally when the market turned after hitting an intraday low of 15,690.00 mid morning. The broader Topix ended the day up 1.06% at 1,635.24.

In South Korea, the Kopsi Index ended with a 0.56% gain, reversing a 0.7% loss in the morning.

In Asian trading, the April gold contract was quoted at $537.20 an ounce late afternoon, down $1.60 but off the session lows of $537.20.

In Tokyo, shares of large industrial consumer stocks rose as investors bought identifiable brands and other firms viewed to benefit from surging overseas exports, given the release of higher-than-expected trade surplus data for December, and released Monday.

"People are worried the Bank of Japan will change its interest rate policy, but I don't think it is a negative for the stock market because the economy is moving out of deflation and that is positive for the stock and asset markets," said Hirokaza Yuihama, regional head of strategy for the Daiwa Institute of Research, an entity affiliated with the Daiwa Securities Group.

"The fundamentals of the economy haven't changed, domestic consumption is improving and deflation will be over in the next few months," he said.

Sanyo Electric Co (6764) declined as much as 2.12%. The company announced an agreement with Finland's Nokia Corp
NOK, +0.28%
to establish a 50-50 joint venture in the U.S. to make 3G cellular telephones as early as autumn.

In the currency markets, the dollar drifted lower against the yen, buying 117.28 yen, down 0.48 yen from its quote of 117.76 yen in New York late Monday.

The broker said Billiton should also report a capital return of $1 billion that will bolster its war chest for future acquisitions.

Rio Tinto
RIO, +1.10%
the world's second largest mining group, gained 0.7% in Australian trading. Mining shares fell dramatically Monday after a sharp decline in metals prices last week.

The only significant decliners around the region were Jakarta, which fell 1.86% and Thailand where the SET index fell 1.81%.

In Bangkok, investors were jittery a political scandal involving Prime Minister Thaksin Shinawatra could enlarge into a constitutional crisis. Critics have urged the billionaire prime minister to resign. He allegedly concealed his ownership stake in a sensitive business dealing last month.

In Hong Kong the Hang Seng Index gained 0.71%. The H-share index tracked the volatility in Tokyo, declining as much as 1.07% in the morning before reversing to close 2.17% higher.

Shares of HK & China Gas (3) rose 3.33%, adding to the 6.3% rise during the past three trading sessions, to an all-time high. Brokers noted company executives continue to accumulate stock at current levels.

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